The Vocational Training Council was criticised for poor management practices that led to at least $160 million in lost revenue.
The Audit Commission questioned a host of council practices, including delays in cutting staff gratuity rates, which had cost taxpayers $64 million.
Although six of seven local tertiary institutions had cut their contract gratuity rate from 25 per cent to 15 per cent by March 1996, the council did not adjust its rate until March this year.
The council was also found to have changed staff benefits or implemented plans without first seeking government approval.
A total of $4 million was paid to staff in lieu of leave in the past year, and design changes added $85 million to the estimated cost of staff quarters in Chai Wan.
The auditor said the scheme by which staff cashed in leave breached the Government's subvention principle.
A total of $10 million in rent was lost because 15 of the 100 senior staff quarters were vacant in June.